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Scarcity and the Factors of Production. Chapter 1: Section 1. Need- Air, Food, Shelter. Want- An item we desire but not necessary for survival. Economics is the study of how people seek to satisfy their needs and wants by making choices. Scarcity and Choice.
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Scarcity and the Factors of Production Chapter 1: Section 1
Need- Air, Food, Shelter. • Want-An item we desire but not necessary for survival. • Economics is the study of how people seek to satisfy their needs and wants by making choices. Scarcity and Choice
Goods are physical objects such as shoes and shirts. • Services are actions or activities that people perform for one another. • Scarcity implies limited quantities of resources to meet unlimited wants. Scarcity
A shortage occurs when producers will not or cannot offer goods or services at the current prices. • Holiday season • Wars • Scarcity always exists. Why? Scarcity vs Shortage
Land • Labor • Capital • Physical Capital • Human Capital • Entrepreneurs Factors of Production
The factors of production are all the resources used to make goods and services. Factors of Production
All natural resources used to produce goods and services. • Fertile land, coal, oil, water, forests Land
The effort that a person devotes to a task for which that person is paid. • Medical aid, Assembly line, paintings, repairs Labor
Capital is any human-made resource that is used to produce other goods and services. • Physical Capital v. Human Capital Capital
Human made objects used to create other goods and services. • Buildings and tools • Physical capital is needed for Extra time, more knowledge, more productivity. Physical Capital
The knowledge and skills a worker gains through education and experience. • Doctors and stethoscopes • Teachers and computers Human Capital
Ambitious leaders who decide how to combine land, labor and capital resources to create new goods and services. • Individual who take risks to start a business and create new industries. Entrepreneur
Micro and Macro Views of the World • Microeconomics: The study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments. • Macroeconomics: The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make. THE ECONOMIC WAY OF THINKING